Foreign Trade policy has always been a point of focus for the whole industrial sector in any country including India. The Policy is the major decider as to what direction will the exports and imports move and what impact will it have on the economy.
The current government, within days of coming to power announced a Make In India concept. Not that it did not exist, but a strong advertising on international front with the Prime Minister himself being the promoter in chief of the motion, exports of Indian goods is bound to increase. The government has set up teams to actually look thorough policies and regulations to make MAKE IN INDIA a strong successful phenomenon. And if it succeeds, it will be a very huge advantage to India.
In the government’s quest to promote exports, it was but imperative that the industry, specifically the exporters could expect something very lucrative to incentivize exports. The new MEIS (Merchandise export from India scheme) has actually been accepted by the industry as a whole in a very positive manner and why not? It spells huge benefit for them and conversely to the MAKE IN INDIA phenomenon too.
BEFORE MEIS
Till the 31st March 2015, before the MEIS came into picture, there were incentives for exporters. The incentives were in form of Focus Products and Focus Markets. The incentives were 2 to 4% of total FOB (FREE ON BOARD) value for certain products and markets. You can see the List Attached.
The Schemes were: Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri. Infrastructure Incentive Scrip, VKGUY
This benefit was over and above the duty drawback that manufacturers and exporters received.
To mention in specifics, vitrified tiles industry enjoyed a 2% advantage from the Focus Product Scheme.
The major drawback of the scheme was the non-inclusion of Middle Eastern markets in the Countries/Markets Lists. As we know, a major portion of Ceramic exports is still in the Middle East or through the Middle East. The enterprises in the ceramic industry relatively could not get a big advantage of exports to Middle East.
Apart from this there were many operational as well as documentations bottlenecks that the previous schemes did not consider under its purview.
Foreign Trade Policy 2015-2020 Unveiled the MEIS
WHY?
The latest FTC – MEIS is an outcome of the government’s three pronged economy thrust concept. It is designed to promote the thought of Make in India, Digital India and Skills India initiatives.
As we started off in this article, the goal of the government is to create a huge demand for Indian goods and services from India. This would in turn lead to better employment, more cash flow, increased foreign reserve and most of all better purchasing power of Indian consumer leading to more consumption and better GDP. These economic factors could all be the delivery agents of the Acche Din as per the government’s promise.
The Foreign Trade Policy 2015-20 is one of the many steps taken by the government to fulfill all the three initiatives of the government.
Major Changes
The scheme merges all the previous Export Incentive schemes viz; Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri. Infrastructure Incentive Scrip, VKGUY under a single scheme making things easy to understand and implement.
Under the scheme, there are a number of countries added which or previously did not make the list for focus markets. The best part of the inclusion is the Middle East countries.
LIST OF COUNTRIES of Significance for ceramic industry include

The Middle East Advantage
Indian Ceramics has always been a great manufacturer and supplier to the Middle Eastern countries. There was actually a very little need to incentivize the exports to these countries, as felt by the previous government. However, the new FTP has provided the incentives in these countries which can be seen as a major fillip to the exports in Middle East as well. Moreover, this also shows the governments inclination to make exports simple quick and hassle free promoting exports. Apart from the monetary advantage the manufacturers will see, there will surely be a plethora of other operational as well as management advantages making exports frustration hassle free.
A point to be noted here is this incentive is over and above the duty drawback the exporters can claim.
Use of the License (Duty Credit Scrip)
The exporters can make multiple sue of the license of exports. The rate may differ as per the product category, but the license value, calculated in Dollar of FOB/FOR value of exports can have many uses.
Direct Imports: Ceramic Industry has a number of raw materials as well as machinery imports. The License can be used by them to pay the Import duty.
Sell the License to Importers: The license is fully transferrable and hence, it can be sold to any importer who in turn can pay the import duty by presenting the license to the concerned Customs at the time of clearance.
Pay Excise Duty: The exporter can pay excise duty on domestic procurement of goods by using this license. The same can also be used for Service tax with effect from 1st April, 2015.
Impact on Industrial Practices
Price Competitiveness: The 3% odd benefit in terms of large value of exports is a significant cushion for the exporter. This permits the manufacturers in ceramic sector to provide more competitive prices to beat the international competition and/or motivate the exporter to stay focused on quality without spiking prices. The pricing even 3% less is great for the importer/ international buyer. The incentive gives a room for the exporters to play with in the global markets.
Quality: With 3% extra earning, an alternative use is to enhance technology products and hence the quality of the product too. This also gives a cutting edge to the exporters to increase exports through quality competitiveness especially with the European companies.
Simplification
The new policy also seeks to simplify the process. This will give rise to better structure of management for exports. The consultants and export agents will have a smoother and quicker path to exports, catalyzing exports.
This will also bring about a new breed of smart and professional export management companies and advisory agents in the markets, selling their services. These agents consultants in coming years will be empowered to export their services to companies wishing to export machinery and raw material to Indian ceramic industry.
Better Return on Investment
Overall the incentives will do just what it is meant for, promote exports. In the bargain there will be better return on investments felt by the manufacturers in ceramic sector.
Build Avenue proposes all the manufacturers to study the policy thoroughly and start fresh on the exports of ceramic goods.